Tuesday, 16 June 2015

SCOTTISH FERRY NEWS

CalMac ferries face being cut adrift

Profits are coming before people as the shipping operator is steered towards privatisation, writes Brian Wilson of The Scotsman newspaper

For the past few weeks, there has been a brand new vessel
operating on the Stornoway-Ullapool route bearing a revered name from
the annals of Hebridean shipping – the Loch Seaforth.
The livery
is in the familiar red and black of Caledonian MacBrayne. By next year,
on current trends, the Loch Seaforth and the rest of the CalMac fleet
will be operated by Serco, a sprawling, debt-ridden conglomerate which
was until recently debarred from competing for UK government contracts
after being caught fiddling the taxpayer for £46 million.
The story behind the Loch Seaforth is instructive. For the first
time in the history of CalMac, the company is operating a vessel that is
owned by a bank rather than by the Scottish public, with CalMac allowed
to play no part in the design or commissioning.
Instead, the Loch Seaforth was procured by the Scottish Government
via a PFI deal. It is owned by Lloyds Bank and leased to a quango called
Caledonian Marine Assets Ltd (CMAL) which sub-leases it to CalMac. It
is a structure geared to privatisation with the identity of the operator
irrelevant.
The communities served by the Loch Seaforth did not
support the idea of a single, larger ferry taking over the route and
operating on a round-the-clock basis. Long experience has taught that
ferries have a habit of breaking down, and over-reliance on a single
vessel is a hostage to fortune.
Local opinion was ignored by
Edinburgh and CMAL, whose imperative was a deal acceptable to Lloyds
Bank. CMAL is chaired by a Danish industrialist and its board contains
not a single resident of the islands served by its vessels. The
centralising Scottish Government does not believe in dissenting, local
voices.
Rhoda Grant MSP tabled questions about the Lloyds Bank
deal. How much will the £42 million ferry actually cost the taxpayer?
Who is responsible when things go wrong, as they surely will? With its
usual contempt for Freedom of Information, the Scottish Government
blocked them all as “commercially confidential”.

Recently it was confirmed there will be a two-horse race to
operate Clyde and Hebridean ferry services. The contract has been
extended to eight years. If CalMac loses, the state-owned company will
be dead and buried, which many believe to be the long-standing objective
within the civil service, now rubber-stamped by ministers.
They
are already facing legal action over the Northern Isles ferry contract
where a CalMac-related company was removed to make way for Serco. It has
transpired that the CalMac bid was returned unopened on the basis of an
alleged technicality and it was actually the lowest bidder. CalMac is
forbidden from taking action but a third bidder is pursuing its own
interest through the courts.
The Clyde and Hebrides contract is
much bigger, a £1 billion prize. It was due to be awarded in 2013 but
the late Bob Crow of the RMT union threatened industrial action over
unresolved issues of terms and conditions in the event of privatisation.
It was not a dispute the Scottish Government wanted, so the CalMac
contract was extended until the referendum was out of the way.
Now
the process has begun again, though it has been carefully timetabled so
the outcome need not emerge until after next year’s Holyrood elections.
Meanwhile, the “terms and conditions” have still not been settled,
leading to a strike ballot in which CalMac’s employees have given 90 per
cent support to industrial action.
CalMac is between a rock and a hard place. It has a hefty pensions
obligation which the Scottish Government has so far refused to include
as a condition of contract. This would give Serco a massive bidding
advantage over CalMac. Whether or not ministers will create a level
playing field on pensions is a litmus test of the Scottish Government’s
desired outcome.
I have never believed it necessary to put these
lifeline services out to tender under EU regulations. Along with the
unions, I argued that case under the previous Lab-Lib Dem administration
and, while it did run a nominal competition, it was structured in a way
that resulted in no private company seeking to oust CalMac.
This
time, the exact opposite approach has been taken. As the STUC points
out, the Scottish Government went to the European Commission seeking a
derogation on length of the contract but “dodged the fundamental
question of whether a tender competition is necessary in law”. As so
often, EU regulations are used as cover for an agenda set by ministers
and civil servants themselves.
In the 2012 Ferries Review, then
transport minister Keith Brown, in full Thatcherite mode, proclaimed
that competition would bring in all sorts of innovative companies to
create best value for the taxpayer. In fact, no such thing has happened.
After the Northern Isles outrage, no other company has bothered taking
on Serco, the Scottish Government’s privateers of choice.

The
Scottish Government had ample grounds to disqualify Serco which, at the
time of pre-qualifying, had a negative balance sheet. It has now raised
funds through a fire-sale of assets and a rights issue. But it has set
up a special purpose vehicle to bid for the ferry franchise. The
question of what substance stands behind it is one of intense interest
to west coast communities.
One of Serco’s first actions in the Northern Isles was to axe a
loss-making crossing because it cost less to pay a penalty under the
contract than it did to run the ferry. If the same accountancy principle
was applied to west coast routes in the middle of January, there would
not be many ferries sailing.
I think it is safe to say that almost
literally nobody in the west coast communities served by CalMac wants
to see these services privatised. That is far from claiming that CalMac
is perfect and it will continue to be the whipping-boy even when – as in
the case of the Loch Seaforth – it is not responsible for decisions
taken.
But everyone knows that CalMac exists to serve fragile
economies rather than to maximise profit. It employs local people on
decent terms and conditions. In short, it is an integral part of the
peripheral communities it serves. It is time to ensure the whole of
Scotland knows how CalMac is being walked to the scaffold by our
oh-so-left-wing government, before it is too late.

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